Gold Price Forecast: XAU/USD sees a bumpy ride below $1,800, US ISM PMI eyed

• Gold price is likely to slip below $1,800.00 as odds of a 75 bps rate hike by the Fed have advanced.
• Fed’s focus is on bringing price stability to the economy.
• The activation of the descending triangle will send the gold prices deep into the negative trajectory.

Gold price (XAU/USD) is establishing below $1,810.00 after facing a steep fall while attempting a bullish reversal on Thursday. The precious metal is hovering near a fresh two-week low at $1,802.78 and is aiming to balance below the psychological support of $1,800.00. The release of the US core Personal Consumption Expenditures (PCE) Price Index at 4.7% has bolstered the odds of one more 75 basis points (bps) interest rate hike by the Federal Reserve (Fed) in July.

The US core PCE Price Index remained in line with the estimates but lower than the prior release of 4.9%. This indicates that the elevation of interest rates by the Fed to 1.50-1.75% in its past three monetary policy meetings has failed to make a substantial change in the price levels. Also, the Fed is ‘unintentionally committed’ to bringing price stability to the economy. Therefore, it will do ‘whatever it takes’ to cool off the red-hot inflation.

Going forward, the focus will remain on the US ISM PMI. A preliminary estimate for the economic data is 55, lower than the prior release of 56.1.

Gold technical analysis

On an hourly scale, the gold prices are expected to slip significantly below the psychological support of $1,800.00, which will activate the Descending Triangle formation. The downward sloping trendline of the chart pattern is placed from June 16 high at $1,857.58 while the horizontal support is plotted from June 14 low at $1,805.11. The gold bears have defended the 100-period Exponential Moving Average (EMA) at $1,820.11. Meanwhile, the Relative Strength Index (RSI) (14) will bring a fresh downside move after slipping below the 40.00.

Gold hourly chart